Last week, Saudi Arabia signed a deal worth $1.7 billion to improve its missile defense capabilities. In November, the country received $4 billion in armaments as a part of the largest U.S. weapons package ever agreed to with a foreign country. Also, Bahrain has received guns and ammunition from the U.S., which are probably being used against the Bahraini protesters. The United Arab Emirates ranked sixth in the list of world arms buyers.

These examples underline the fact that the oil-rich regimes of the Gulf are the countries with the highest military spending worldwide as a percentage of GDP.

If one considers the authoritarian nature of these regimes and the high reliance of their economies on oil revenues — money often used to police their own people — one could easily assume that a drop in oil prices could undermine the regimes’ anti-democratic power. Thus, it would leave room for a democratic transition, which eventually would have a positive impact on the populations of the Gulf countries. No matter how attractive this assumption may be, however, it should not be taken for granted.

In the “authoritarian bargain model,” autocratic regimes tend to control their populations not only by repression, but also by offering them welfare benefits or political influence. The populations may desist from asking for political rights in exchange for economic security or some influence in policymaking. These two forms of redistribution, however, are negatively related and an increase in welfare does not usually take place at the same time as political concessions. Hence, the authoritarian leaders tend to select one thing or another as a bargaining chip for their citizens’ silence.

In the oil-rich regimes, it is obvious that the selected benefit is social welfare. While the Gulf region has the highest military expenditures (as a percentage of GDP) in the world, the percentage of their GDP earmarked for health and education is remarkably high as well. In 2009, Saudi Arabia spent 11.2% of its GDP on military expenditures, while it earmarked 10.6% on health and education systems. Kuwait, in 2009, spent 4.4% of its GDP on defense while allotting 7.1% for health and education.

With this in mind, how could a drop in oil revenues affect the region in terms of democracy development?

If forced to reduce their government expenditures, the oil-rich regimes would most likely dial back on social welfare spending, for defense spending is vital to maintain repression in a non-democratic state. However, in order to maintain their populations´ support, the Gulf regimes could offer some political concessions in exchange for the loss of social benefits, following the “authoritarian bargain model.”

This partial political liberalization would likely be withdrawn as soon as their economies recuperate as a result of an increase in oil revenues, or perhaps an economic diversification. Consider also the new player in the region – China. China is Saudi Arabia’s fourth largest export partner, and the trade between the two countries has steadily increased during the last decade. Moreover, the Gulf states have started to diversify their economies. In 2009, Saudi Arabia’s non-oil government revenues increased by 5%. Qatar has allocated 50% of its government investment to non-oil industries, and Doha hopes to reduce its dependency on oil down to zero by the end of this decade. In the Gulf Cooperation Council, $2.4 trillion is being spent on nuclear and green energy as well as construction and transport projects, to be completed before 2020.

In the long run, a drop in oil revenues could cause an expansion of political rights in the Gulf, yet, in all probability, it will be of a short-term nature and may occur at the expense of social welfare. Thus, if the international community wants to promote true democracy in the Gulf, it cannot just rely on the effect that a reduction in oil imports would have. A more efficient formula needs to be sought after —ideally, one that affects the underlying political culture of the region.